A few agents and I were sitting around talking about the future of Florida real estate. One agent speculated that this market could not last forever and would one day have to come down. His theory was that everything that goes up eventually comes back down and that cycles are inevitable.
Then we got to thinking. What if this market doesn’t have to come back down? Is it possible Florida has been undervalued compared to other nice areas of the country?
Why Are People Moving to Florida?
Let’s talk about why Florida looks so attractive, and what the future may hold. Everyone knows Florida is famous for sunshine and beaches and almost perfect weather in the winter. Florida is also attractive because we have no income tax, which is substantial compared to some states that have both state and local taxes.
Florida has also been business friendly without all the lockdowns other states have endured. We are seeing businesses flock from lockdown states and moving to Florida, bringing employees with them. The real question is, what will happen in a few months once the vaccine is widely distributed and lockdowns end?
Some business owners we have talked to have had it. Their fed up with restrictive policies and high taxes and they are not moving back no matter what. It is probably safe to assume that anyone who has moved away from high tax states is not moving back. The real question is, what will the people who wanted to move but just couldn’t yet do? Will they further their plans to make the move or just stay put?
It’s Hard to Just Pick up and Move
Some people have ties to an area. Some businesses have been in the family for generations and walking away isn’t as easy as it sounds. It takes careful thought and planning, and there are pros and cons. If these states continue to raise taxes and have high crime, it may chase the next wave of businesses and residents away as well.
People have learned through this pandemic that many jobs can work from anywhere. Companies have learned they can save high lease rates on buildings if their employees work remotely or move to less costly locations. This pandemic may have been the impetus for a transition that benefits the company and its workers, and that ship may have sailed.
Florida is the big winner in all of this, and if it continues, strong demand may not slow up when Covid comes under control. In this scenario, prices could rise further as we are not building enough homes to meet the demand.
It is true that business tends to follow cycles, but that is premised on demand rising and falling. What if demand does not fall? Supply is limited, and if demand stays constant or rises, we have more appreciation to go. We could see a lot more.
Future Warning Signs
It is also true that nobody knows the future of Florida real estate, or the economy for that matter. Rising oil prices and inflation could slow the economy and kill jobs. Florida still has a lot going for it, and that might offset whatever happens to the economy. Realtors do not know what will happen in the future. We believe more sellers will decide to cash out in a month or two as Covid becomes safer, but will it be enough to meet demand?
The bottom line is the market is good, and we expect the future of Florida real estate to be good for a while. There are a lot of wildcards in play that could affect things a few years down the road, like immigration, cost of building, oil, taxes, interest rates, inflation, etc. We are starting to see people cash out of Wall St and put it into main street. Some people thought the Dow was overpriced at 18,000. Now it is over 31,000.
Prices in Florida have risen, and we still might be a bargain. Just not the bargain we were in the past. To find out what your SW Florida home is worth, visit www.SWFLhomevalues.com It’s fast and Free. Or call Sande and Brett Ellis 239-310-6500
Good luck, and Happy Selling!